Zero VAT rate for construction works was canceled

The Parliament canceled zero rate on the value added tax (VAT) for construction works for some companies and some individual persons. MPs approved on Thursday, July 20 in first reading an amendment on this issue. According to the amendments zero VAT rate for construction works is changed by the standard VAT of 20% that, as authors say, will contribute to the state budget with about MDL 8.6 mln. In this way, equal conditions for all individual or legal persons building dwellings are created and the fiscal management is getting less complicated. MP Alexandru Oleinic declared within Parliament’s sitting that it is not clear enough why the government introduces such an amendment if in September 2005 the tax of 20% was canceled, justifying that this facility will diminish the price for dwellings. This amendment will generate price increases on the primary estate market, MP told. The Minister of Finance, Mihai Pop declared that the mentioned above VAT facility did not diminish prices as expected, but he did not say anything about the possible price increases. At present, the prices for on meter of a new living space start at USD 400 in suburbs and reach EUR 1000 in down-town.